China heads into the week-long Golden Week/70th-anniversary-holiday break starting today (October 1) with a tiny bit of good news about the health of its still vital manufacturing sector.
According to the two start of month surveys of manufacturing (one Government, one private survey), the recent weakness has halted with small gains recorded.
The second survey – the private gauge from the Caixin magazine and Markit showed of China’s factory activity expanding for the second straight month in September, thanks to higher production and new orders from home.
In contrast, the official survey from the National Bureau of Statistics revealed activity in the manufacturing sector had contracted for the fifth consecutive month.
The Caixin China manufacturing purchasing managers index rose to 51.4 in September from 50.4 in August. That meant the reading stayed above the 50 mark that separates expansion in activity from contraction.
This survey tracks activity among smaller companies while the official purchasing managers surveys examines what is happening among large groups.
While total new orders grew at a faster rate in September, new export orders fell thanks to the impact of the continuing trade war with the US.
All the boost to orders last month came from domestic sources, which in itself is good news because it shows the local economy is still doing well, even though deflation in producer prices is still a problem and import data suggests weak demand.
China’s official manufacturing PMI, a competing gauge, also released on Monday, edged up to 49.8 in September from 49.5 in August, thanks to recoveries in production and total new orders.
The next lot of data comes in 8 days with the monthly survey of services activity, while the major data flow doesn’t start until October 14 with the release of September and 9-month trade data, bank loans, new car sales, and foreign direct investment.
